Constant depends on term and rate: Was running numbers on a 9 cap retail center with 30% down on 20y term with current rates at 7.5% as a guess. $5m pp 30% down - $1.5m 70% financed - $3.5m 240 months term 7.5% rate $28,195.76/mo - $21,875 int, $6320 pri Total yearly payments - $338,349.14 Constant is payments divided by balance owed - 9.67% which is higher than the cap rate. That means your cash on cash will be lower than cap rate because your constant is higher than the rate. Cap on $5m - $450,000 Cap minus yearly payments - $111,650.86 Coc calc - 111,650.86÷1,500,000 Cash on cash - 7.44% Cash flow plus amortization return is 12.68% however if monthly cash return is important to you a shorter amortization is less good. That's one of the reasons we don't like banks. We would rather let's someone else buy it. Give them the money as an option. Pay them an 8 cap with a larger buy back later. Example: 8% on $3.5m - $280,000 9% cap - $450k Cash on cash - $170k Coc % - 11.33% Can give yourself way better cash on cash by giving up amortization. Also I would rather work with someone else free and clear than have a bank stuck on there. #retwit